MUMBAI: More than two thirds of petrol pumps across the country will stop accepting debit and credit cards as lenders led by HDFC Bank, ICICI Bank and Axis Bank decide to capitalise on surging card payments by levying transaction charges where none existed before the demonetisation exercise announced on November 8 last year.

Owners of petrol pumps are demanding that government and the banking regulator intervene to stop banks from this sudden decision to levy the MDR charges from Jan.9 which could eat into more than a quarter of their revenues. A 1% transaction value translates to 30% to 40% of gross dealer margins on petrol and diesel respectively.

According to petrol pump dealers HDFC Bank, Axis and ICICI Bank have sent notices to petrol pumps demanding MDR charges ranging from 0.25% to 1%. With a majority of transactions at more than Rs 2000, these charges would make the businesses unviable, dealers said. Furthermore, the sudden levy of charges is been looked at as opportunistic act of banks and may lead to financial losses for dealers.

“HDFC Bank, Axis Bank and ICICI Bank have imposed 1% charges on pumps, there was no such levy earlier in fact we got reimbursement from banks if any charge was applied,” said Ajay Bansal, President, All India Petroleum Dealers Association. “Now if they start charging us it will be difficult for us to bear the cost as we will be left with no margin. We are with the government to go cashless but our hands have been forced in this matter by banks and RBI.”

Out of the total 53840 petrol pumps in the country PoS terminals has been deployed at nearly 37,000 outlets. According to dealers HDFC Bank caters to 60% of that market. The petroleum dealers in Mumbai said that they had received notices only from HDFC Bank so far and will block terminals of any other banks that send similar notices.

“HDFC Bank without any reason or rationale has sent us this letter and wants to charge 1% fee on transactions our entire commission is 2.7%,” said Ravi Shinde, President, Petrol Dealers Association, Mumbai. “They didn’t discuss this matter with us so now we will stop use of all HDFC Bank PoS terminals on pumps in Mumbai. We will be forced to return to our earlier system of cash instead of cashless. If any other bank issues such a notice we will block them too.”

A copy of the notice sent by HDFC Bank to petrol dealers which ET reviewed says that on a debit card transaction of less than Rs 1000 a merchant discount rate (MDR) of 25 bps will be applicable while a MDR of 50 bps will be charged on a transaction value ranging from Rs 1000 to Rs 2000. While a MDR of 1% will be applicable for fuel transactions of more than Rs 2000. On credit cards a flat MDR of 1% will be charged.

“All PoS machine issuing banks who are not charging a commission and are willing to adhere to existing commercial arrangements will correspond with us to let us inform our members to continue with accepting cards on their machines,” said A.D Sathyanarayan, President, Consortium of India Petroleum Dealers.

“To save the environment and to fight climate change, my government has planned a major campaign. By 2022, we want to generate 175 GW of renewable energy. In the last three years, we have already achieved 60 GW or around one-third of this target,” he said.